In a Nutshell
The Common Agricultural Policy (CAP) aims to support farmers and ensure Europe’s food security. It sets out the EU legal framework and funds the support member states can provide to agriculture, forestry, and rural development. It has a double objective of ensuring Europe’s food security and incentivising environmentally friendly agriculture.
The CAP has greatly evolved since its creation in 1962. In its latest iteration, the CAP 2023-2027 pursues 10 overreaching objectives aimed at ensuring agricultural productivity and farmers’ income while encouraging environmentally friendly practices.
The total budget of the CAP 2023-2027 amounts to EUR 386.6 billion. The budget is divided into two funds, which are often referred to as the two pillars of the CAP:
- The European Agricultural Guarantee Fund, which totals EUR 291.1 billion, provides direct support to farmers and funds market measures.
- The European Agricultural Fund for Rural Development, with a total allocation of EUR 95.5 billion dedicated to rural development.
Each country implements the CAP 2023-2027 at their national level through a CAP Strategic Plan. These plans operationalise the numerous targeted interventions each country undertakes while contributing to the ambitions set by the European Green Deal.
Direct payments to support farmers are granted on the condition that they implement “good agricultural and environmental conditions” (GAEC). Around 90% of the total European utilised agricultural area (UAA) is covered by this conditionality. Furthermore, 25% of direct payments are optional and require farmers to implement eco-schemes (specific to each country) rewarding environmentally friendly farming.
Carbon dioxide removal (CDR) and the CAP interact closely in several important ways. Practices that improve carbon sequestration in soils and ecosystems have many overlaps with soil health and agriculture and thus the CAP. The CAP provides an array of measures aiming to incentivise agroforestry practices, as well as the maintenance and restoration of land ecosystems. Finally, enhanced weathering and biochar are two novel CDR methods that also intersect with farming and may thus interact with the CAP in the future.
There is, however, a dual dynamic within the CAP. On the one hand, some measures within the CAP still indirectly promote intensive farming practices depleting soil carbon stocks. On the other hand, more and more measures are targeted towards improving soil carbon stocks. The significant leeway provided to member states in their implementation of national measures means that the contribution of CAP to carbon removals varies across the EU.
What's on the Horizon?
The CAP 2023-2027 and the national CAP Strategic Plans entered into force on 1 January 2023. In 2024, countries will have to report to the EU Commission on their performances. In 2025, the national CAP Strategic Plans will be reviewed by the EU Commission.
A new obligation to protect wetlands and peatlands will be included in the CAP by 2025 at the latest; wetlands and peatlands are part of the conventional CDR methods.
The Commission will propose an improved methodology to ensure that the contribution of the CAP to climate action is correctly measured and accounted for by 2026 at the latest.
National Strategic Plans and support mechanisms
Within the CAP 2023-2027, CAP National strategic plans operationalise the CAP’s policy objectives at the national level.
The CAP amounts to 20% of the total EU budget and plays an enormous role in the EU’s intervention in the land sector. It provides different support mechanisms:
- income support through direct payments, among others, to incentivise environmentally friendly practices;
- market measures to deal with difficult market situations;
- rural development measures (national and regional programmes to address specific needs and challenges).
Each member state has relative freedom to distribute funding across these three types of support mechanisms and can freely allocate up to 25% of its budget between income support and rural development. The CAP Strategic Plans outline this allocation and describe which measures will be supported within each member state. The CAP 2023-2027 puts higher emphasis on tracking outcomes by setting an annual performance report and a biannual review process for national plans, assessing progress towards their goals and the 10 CAP overarching objectives.
Direct payments use the biggest share of the CAP funding and are conditional to Good Agricultural and Environmental Practices (GAEC), which include measures on maintaining a minimum soil cover, limiting erosion and maintaining soil organic matter, and requiring farmers to save at least 3% of their arable farmland for non-productive areas/features with the possibility to get support to extend it to 7% of the arable land. The new CAP introduces a requirement prohibiting drainage, burning or extraction of peat from peatlands. This prohibition could have a favourable impact on peatlands, allowing them to serve as carbon sinks rather than as sources of carbon emissions.
While a large share of utilised agricultural area (UAA) is set to be farmed under GAECs, only a limited share is set to be under commitments to reduce emissions or to maintain or enhance carbon storage, which includes permanent grassland, permanent crops with a permanent green cover, agricultural land in wetland and peatland. Moreover, this share varies dramatically between countries, from 0% to 85%. The metrics used in the strategic plans are also not the same; some mention the peak coverage year (note: peak year also varies between countries) while others use the average over the 2023-2027 period. It is quite concerning to see that several states currently have no measures to increase soil carbon storage. Experts have also raised the question of whether the measures proposed are enough to reach the objectives set in the strategic plans.
Additional subsidies in the form of eco-schemes can be made available to states as a reward for more environmentally friendly practices. Eco-schemes support various types of voluntary actions that go beyond the CAP’s obligation of conditionality. These include practices related to agro-forestry and carbon farming among others. The Commission has published an extensive list of examples. However, it includes only a handful of practices linked to CDR. Member states are not exploiting this opportunity to the fullest, as only a minority of them plan to use eco-schemes in relation to CDR. Some environmental NGOs raised concerns questioning the eco-schemes’ true environmental benefits.
Carbon farming and related debates
The recent communication by the EU Commission on “Sustainable Carbon Cycles” has highlighted that the CAP should be one of the primary mechanisms to promote carbon farming at the European level, together with LIFE and Horizon Europe’s “Soil Deal for Europe”. The Commission encouraged states to include measures to incentivise carbon farming in their strategic plans. The current efforts on the Carbon Removal Certification Framework (CRC-F), among others, aim to clarify what good carbon farming practices mean.
There are, however, several issues related to carbon farming that need to be discussed and tackled with high priority.
Firstly, carbon farming is a very loaded term. The EU defines it vaguely as “a green business model to reward farmers for adopting practices leading to carbon sequestration”. Therefore, carbon farming as an economic concept and the underlying practices it encompasses should be separated in order to differentiate the business model from the underlying practices.
Secondly, there is a strong opportunity in the CRCF to make clear that the durability of carbon sequestration in soil is lower than for other CDR methods. Any market-facing claims need to be strictly regulated to ensure that fossil emissions are not compensated for through such practices.
Thirdly, soil carbon sequestration comes along with many co-benefits besides carbon removal. These include improved soil quality, positive biodiversity impacts and better water retention. These practices should thus be incentivised. However, key questions remain, such as who should pay, and be paid, to implement these practices and what the basis for payment should be.
Finally, the measuring, reporting and verification (MRV) of soil carbon fluxes is still very much a work in progress. There is currently a trade-off between the accuracy of results and the costs/scalability of methodologies. The EU has yet to determine how best to deploy MRV and at which geographical scale and granularity. The purpose of MRV deployment should be better defined. Furthermore, the commodification of sequestered soil carbon requires more strenuous MRV.
Launched in 1962.
First big reform of the CAP to bring production closer to what the market needs.
Shift from market support to producer support through direct payments to farmers. Farmers are incentivised to endorse more environmentally friendly practices.
The CAP introduces income support tied to environmental, food safety and animal health and welfare requirements
The CAP is once again reformed to increase the competitiveness of the sector, promote sustainable farming and support rural areas.
The EU Parliament, the Council and the Commission agree on the need to reform the CAP again and shift implementation responsibilities.
A transitional agreement is put in place while the reform is negotiated.
Adoption of the CAP 2023-2027.
The CAP 2023-2027 and the CAP strategic plans enter into force.
The EU Commission will submit a report to assess the joint CAP strategic plans in reaching Green Deal targets.
Each country will present an annual performance report.
The Commission will conduct its first performance review of the CAP strategic plans.
The Commission will conduct an interim evaluation of the CAP 2023-2027.
The Commission will conduct a second performance review of the CAP strategic plans.
- Regulation (EU) 2021/2116 of the European Parliament and of the Council of 2 December 2021 on the financing, management and monitoring of the common agricultural policy and repealing Regulation (EU) No 1306/2013
- Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 2021 establishing rules on support for strategic plans to be drawn up by member states under the common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations (EU) No 1305/2013 and (EU) No 1307/2013
- Regulation (EU) 2021/2117 of the European Parliament and of the Council of 2 December 2021 amending Regulations (EU) No 1308/2013 establishing a common organisation of the markets in agricultural products, (EU) No 1151/2012 on quality schemes for agricultural products and foodstuffs, (EU) No 251/2014 on the definition, description, presentation, labelling and the protection of geographical indications of aromatised wine products and (EU) No 228/2013 laying down specific measures for agriculture in the outermost regions of the Union
In a Nutshell
The National Energy and Climate Plans (NECPs) outline the EU member states’ 2021-2030 strategy to meet the 2030 energy and climate targets. The Regulation on the governance of the energy union and climate action (EU) 2018/1999, adopted in 2018, requires member states to regularly submit NECPs and update them. It also sets the EU Commission review process of the plans.
Member states outline how they will address energy efficiency, renewables, greenhouse gas emissions reductions, interconnections, and research and innovation in their NECP. A common template is used to facilitate transborder collaboration and efficiency gains.
So far, the 2030 climate and energy targets aim for at least 55% of greenhouse gas emissions reductions, 32% of renewable energy within the total energy production mix and 32.5% improvement in energy efficiency. The Fit-for-55 package called for more ambitious targets, some of which are still under review, including a 42.5% share of renewable energy within the Renewable Energy Directive.
The current versions of the NECPs, submitted at the end of 2019, massively overlook the role of carbon dioxide removal (CDR) in their ability to achieve their targets. None of the 27 plans include targets for CDR, nor do they take into consideration novel carbon removal methods. Even conventional CDR methods such as afforestation or soil carbon sequestration are not properly addressed in the majority of NECPs.
This is concerning. To reach the scale of removals needed to reach net zero emissions by 2050, CDR capacities must be scaled up now. Member states should seize the opportunity to include CDR in their NECPs. In parallel, the inclusion of CDR in the 2040 targets would set the course until 2050.
What's on the Horizon?
- As set by the Regulation on the Governance of the Energy Union and Climate Action, member states must have submitted an updated draft of their NECPs by 30 June 2023, and the final version by 30 June 2024 unless they can justify that the current plan remains valid.
- On 1 January 2029 and every ten years thereafter, member states will need to submit a new final NECP covering each ten-year period, and a draft one year prior.
- On 3 July, only eight countries submitted their draft updated NECPs: Spain, Croatia, Slovenia, Finland, Denmark, Italy, Portugal and the Netherlands. We will keep monitoring this space as member states submit their NECPs and a more detailed analysis will follow accordingly.
The Regulation on the Governance of the Energy Union and Climate Action entered into force
Deadline for member states to submit their draft NECPs for the period 2021-2030
EU Commission communicated an overall assessment and country-specific recommendations
Deadline for member states to submit their final NECPs
Deadline for member states to submit draft updated versions of their NECPs
Deadline for member states to submit final updated versions of the NECPs
Deadline for member states to submit draft NECPs covering the period 2031-2040
Deadline for member states to submit final NECPs covering the period 2031-2040
In a Nutshell
Article 6.4 of the Paris Agreement establishes the Article 6.4 mechanism, a market-based instrument that countries can voluntarily use to trade credits from emission reduction and removal projects. Under the mechanism, reducing emission levels in one country can be used by another country to fulfil its climate target, Nationally Determined Contribution (NDC).
Often seen as a tool to help countries achieve their climate targets cost-effectively, its real goal is to bring about higher ambition – enabling countries to do more than they could without using it. It’s built to incentivise and facilitate the participation of authorised public and private entities by crediting their emission reduction and removal activities. The projects need to deliver an overall mitigation in global emissions.
It’s a centralised UN crediting mechanism governed by Article 6.4 Supervisory Body. Being a successor of the Clean Development Mechanism (CDM) under the Kyoto Protocol, it will operate under the Paris Agreement, where all countries have climate targets. This means that the host countries need to know that they can still meet their climate targets when selling credits via the Article 6.4 mechanism, and double counting of the same emission reductions or removals must be avoided through the double-entry bookkeeping for emissions accounting (“corresponding adjustments”).
Among its other work in setting up the instrument, the Supervisory Body is preparing the foundation for how the Article 6.4 mechanism will apply to removals. There is a growing ecosystem of novel removal methods, and many of these are poised to be used by countries in their climate targets. Given the lack of broadly accepted international accounting rules for a range of removal methods, the decisions taken under Article 6.4, and the methodologies approved under it, are bound to have an outsized impact on carbon markets globally.
What's on the Horizon?
- The Article 6.4 Supervisory Body is preparing recommendations on methodologies and removals, the rules for transitioning the Clean Development Mechanism into the Article 6.4 mechanism, the accreditation standard, and the project activity cycle for adoption by CMA5 (during COP28).
- SBSTA is preparing recommendations on including emission avoidance and conservation enhancement activities in the scope of Article 6.4 mechanism, authorisation of credits, and connection between registries for adoption at CMA5 (during COP28).
Getting the Article 6.4 mechanism up and running will take a few years.
How will it work?
The Article 6.4 Supervisory Body is responsible for establishing guidance and procedures, approving methodologies, registering projects, issuing credits, and more.
Methodologies may be developed by project participants, host countries, stakeholders, or the Supervisory Body.
The credits are called the Article 6.4 Emission Reductions (A6.4ERs). These are used for both emission reductions and carbon removal. The host country will have to authorise A6.4ERs and account for these by applying corresponding adjustments unless the A6.4 ERs contribute to the national target in the host country (mitigation contribution A6.4ERs).
Removal activities get a maximum of 15-year crediting periods, renewable twice. The mechanism credits emission reductions and removals by public and private sector actors.
2% of Article 6.4 credits are subject to cancellation (“Overall Mitigation in Global Emissions” clause), 5% of credits are dedicated to the Adaptation Fund (“Share of Proceeds for Adaptation”) and other fees for registration, inclusion, issuance, renewal, and post-registration apply as well (“Share of Proceeds for Administrative Expenses”).
Many other details are yet to be ironed out, listed in the “Open elements” section below.
How will removals be covered?
Whilst the mechanism covers emission reductions and removals, it will likely focus on emission reductions in the coming decade, with interest in removals growing as climate targets get closer to net zero and beyond.
The Supervisory Body has been tasked with preparing a general framework for including the full spectrum of carbon removal methods under Article 6.4, called “recommendations”, to be approved at CMA5 during COP28.
For the first time, novel carbon removal methods will be tackled under the Paris Agreement, and the recommendations will set a precedent by establishing broad removals-specific rules under the UN crediting mechanism.
Two separate ongoing work streams are ironing out the details of the mechanism – (1) the Supervisory Body and (2) the Subsidiary Body for Scientific and Technological Advice (SBSTA) where international climate negotiations under the Paris Agreement are ongoing on the technical elements.
The Supervisory body has a busy work program for 2023 and has been tasked to prepare several deliverables for adoption for CMA5 (during COP28). This includes recommendations on methodologies (baseline, monitoring methodologies, methodology development process, review), recommendations on activities involving removals (monitoring, reporting, accounting for removals and crediting periods, addressing reversals, avoidance of leakage), transitioning the Clean Development Mechanism into the Article 6.4 mechanism, developing accreditation standard, and designing project activity cycle.
SBSTA is negotiating recommendations on including emission avoidance1 and conservation enhancement activities in the scope of Article 6.4 mechanism, authorisation of credits by host countries, and work on the registry. These discussions are very technical, have continued throughout the Bonn Climate Conference in June 2023, and will be submitted for adoption at CMA5 during COP28.
1 Emission avoidance in this context mainly refers narrowly to reducing emissions from deforestation and forest degradation (REDD+ projects), not to be confused with how the term “emission avoidance” is used in the voluntary carbon markets where some stakeholders use it as a blanket term for emission reductions and avoidance.
How can stakeholders engage with the Article 6.4 process?
Documents for stakeholder input will be published at least a week before each Supervisory Body meeting. Any organisation can provide written input before meetings, but only UNFCCC-accredited observer organisations can attend the Supervisory Body meetings. Everyone can follow the live stream and watch recordings of past sessions.
|Meeting number||Meeting dates||Deadline for registering as an observer||Deadline for submitting public comments on the meeting agenda|
|SB 006||10-13 July 2023||19 June||3 July|
|SB 007||11-14 September 2023||21 August||4 September|
|SB 008||10 October to 2 November 2023||9 October||23 October|
In June 2023, the UNFCCC launched a dedicated Article 6.4 newsletter covering the latest news, calls for inputs and other announcements from the Supervisory Body.
The negotiations under SBSTA take place in 2-week sessions twice a year during the Bonn Climate Conference and COP.
The Paris Agreement is adopted
The Paris Agreement enters into force
CMA3/COP26 Glasgow – Adoption of the rules, modalities and procedures for Article 6.4 mechanism
Adoption of guidance on Article 6.4, elaborating on key processes and principles, providing SBSTA to work on remaining elements, and mandating the Supervisory Body to operationalise the mechanism
Request for submissions by Parties and admitted observer organisations to submit their views on activities involving removals via the submission portal
Article 6.4 Supervisory Body stakeholder webinar
Public consultation on the three SBSTA working areas on Article 6.4 (inclusion of emission avoidance and conservation enhancement, registries, authorisation of credits)
Technical expert dialogue on the three SBSTA working areas on Article 6.4 (inclusion of emission avoidance and conservation enhancement, registries, authorisation of credits)
CMA5/COP28 in Dubai. The Article 6.4 Supervisory Body will prepare recommendations on removals and methodologies for approval to CMA5.
Article 6.4 Mechanism
- Achieving Overall Mitigation of Global Emissions under the Paris Article 6.4 Mechanism (2019), by Wuppertal Institute
- Designing the Article 6.4 mechanism: assessing selected baseline approaches and their implications (2019), by OECD and IEA
- Best available technology and benchmark baseline setting under the Article 6.4 mechanism (2021), by Perspective Climate Group
- Private sector engagement in Article 6- A post-COP27 analysis (December 2022) by Philip Lee LLP
- Cooperative approaches or Article 6.4 mechanism: which of the Article 6 market mechanism will win the race to engage the private sector? (February 2023) by Holman Fenwick Willan LLP
- UN standard-setters turn their attention to carbon removal (Oct 2022), by Eve Tamme and Paul Zakkour
- COP27: Paving the way for the “removals COP” (Nov 2022), by Eve Tamme and Paul Zakkour
- EU and UN Kickstart Their Work on Carbon Removal for 2023 (March 2023), by Eve Tamme
- Challenges for Carbon Removal under the UN Standard (May 2023), by Eve Tamme
Mechanism established by Article 6, paragraph 4, of the Paris Agreement
Key Institutional Stakeholders
Additional StakeholdersThe Article 6.4 Supervisory Body Parties to the Paris Agreement The UNFCCC Secretariat, Mitigation Division Observer organisations in the UNFCCC
In a Nutshell
As part of the European Green Deal, the EU has set out legally binding climate objectives to (1) cut domestic net greenhouse gas (GHG) emissions by at least 55% compared to 1990 levels by 2030 and to (2) reach climate neutrality by 2050. The European Climate Law provides the legal framework to support these objectives. The law also requires the European Commission to propose a 2040 climate target for the EU in the first half of 2024, accompanied by an indicative EU GHG budget for the period 2030-2050.
The Commission is at the early stages of this process and has opened a public consultation to guide its assessment of a suitable 2040 climate target, inform the analysis of the sectoral transformations needed to meet this target, and provide input on the possible evolution of climate policy instruments beyond 2030. It will also lay out preferences between establishing separate or joint targets for emissions reductions and carbon removal – the two central components of net zero.
Carbon Gap advocates for the EU to set an explicit 2040 net emission reduction target of 95% compared to 1990, in line with advice by the European Scientific Advisory Board on Climate Change. This target will be the key milestone that the Union commits to reaching on the path to climate neutrality by or before 2050.
Deadline to submit feedback to the call for evidence for an impact assessment, which will inform the new Communication on the EU climate target for 2040
Planned Commission adoption of the Communication, which will lay the foundation for a draft law setting the 2040 target
- Call for evidence for an impact assessment on the new EU climate target for 2040
- Letter from academics and climate experts urging European legislators to adopt separate targets for carbon removals
- 2023 — the Year of Shaping EU’s 2040 Climate Target, by Eve Tamme
- Scientific advice for the determination of an EU-wide 2040 climate target and a greenhouse gas budget for 2030–2050
- Carbon removal: the key to getting the 2040 climate target right
Key Institutional Stakeholders
European CommissionDG Climate Action (CLIMA), Unit A.2: Foresight, Economic Analysis & Modelling DG Climate Action (CLIMA), Unit A.1: Strategic Coordination, Legal & Institutional DG Energy (ENER), Unit A.4: Chief Economist Team DG Energy (ENER), Unit A.1: Interinstitutional, policy coordination and planning
Additional StakeholdersThe European Scientific Advisory Board on Climate Change will inform the Commission’s assessment of a suitable 2040 climate target
In a Nutshell
The European Commission has proposed a voluntary regulatory framework for the certification of carbon removals (CRCF), which will be the first of its kind in width of covered CDR methods, pending adoption by co-legislators. The stated goal is to foster and accelerate the scale-up of sustainable carbon removals, which includes a wide variety of CDR methods to be applied by land managers, industries, and others to capture and store atmospheric or biogenic CO2, as well as fight greenwashing, and harmonise carbon removal market conditions.
The proposal includes and distinguishes 3 types of carbon removal categories: carbon farming (such as reforestation and soil carbon management), permanent carbon storage (such as BECCS and DACCS), and carbon storage in products (such as wood-based construction materials). In order to ensure the quality of carbon removals certified under the framework, removals need to meet several quality criteria (so-called “QU.A.L.ITY” criteria), covering the aspects of quantification, additionality, long-term storage, and sustainability.
Under the framework, the European Commission, assisted by an expert group, will develop methodologies for the certification of a range of carbon removal methods and recognise certification schemes. The certification schemes will have the obligation of listing certified removals in interoperable public registries, while certification bodies, supervised by Member States, will carry out certification audits and the issuing of certificates.
In its current state, the proposal does not align with scientifically widely accepted definitions of carbon removal as the definition also covers emissions reductions. It also does not outline any rules for how the carbon removal certificates generated under the framework could or should be used. The certificates could be used in corporate reporting, in contracts in supply chains, in voluntary markets, or to receive public support for carbon removal activities.
What's on the Horizon?
2023: In the next steps, the European Parliament rapporteur on the file (MEP Lidia Pereira, EPP, PT) will prepare her initial report, and discussions in the Parliament and Council will continue.
- The draft report is expected to be voted on in the Parliament’s Environment committee in September 2023 and then in its October plenary session.
- In the Council, a general approach on the text among EU Member States is expected in Autumn 2023.
2023: The expert group on carbon removals kicked off their work in March 2023. Among other tasks, the group will be providing technical advice to the Commission on the development of the methodologies under the CRCF.
2023: In parallel to the legislative process, work will be ongoing on detailed methodologies for different carbon removal activities that will be set out in Commission delegated acts.
Within one year of the implementation of CRCF, the Commission will have to assess the potential inclusion of carbon storage in products in scope of the LULUCF Regulation.
By 2026, the Commission will have to assess the potential inclusion of carbon removals with permanent storage in the EU ETS.
Aim of the file
The CRCF will be the EU’s first certification framework that focuses exclusively on carbon removals. The stated goal of the file is a certification framework which creates trust in the quality and reliability of certified carbon removals among carbon removal providers, certificate buyers, and the public. The proposed framework also aims to increase transparency in the field of carbon removal certification, by creating public registries and methodologies for a wide variety of carbon removal methods, while also outlining requirements for monitoring, reporting and verification. As a result, interest and willingness to fund carbon removal activities and purchase certificates are expected to increase, leading to an expansion of carbon removal activities by current and potential operators. If adopted by co-legislators, the framework will form the basis of recognising and rewarding land managers, industry, and other carbon removal activity operators for high-quality carbon removals and their contribution to reaching the EU’s climate change mitigation goals.
Meaning for climate goals
By establishing this framework, the European Union works towards reaching its goal of climate neutrality in 2050 and net-negative emissions thereafter, both of which will rely heavily on significantly upscaling carbon removal. As the first legislative file focusing primarily on carbon removals, it also contains a definition of which, in the current proposal, also includes emissions reductions. Furthermore, the proposal does not provide any rules around the potential uses of certificates. Potential uses envisioned by the Commission range from the use of certificates to access funding from policies, such as the CAP, to the use on voluntary carbon markets.
Room for improvement
- Eliminate ambiguity as to what is and is not a removal
The current definition of carbon removals in the proposal also includes emissions reductions from biogenic carbon pools, and is not aligned with broad scientific consensus (see e.g., IPCC definition). In order to avoid conflation of emissions reductions and removals, and to allow the CRCF to become a global model for carbon removal certification, emissions reductions need to be excluded from the definition.
- Ensure a strict separation between higher-durability and lower-durability removals
The currently proposed storage categories do not clearly differentiate CDR methods based on their carbon storage durability nor separate biological from geochemical storage media. Separation of these storage media is essential as the need and difficulty of MRV vary significantly between CDR methods based on their storage media.
- Equip the framework to track how carbon removal is used so inappropriate claims can be policed
The CRCF requires provisions determining permitted uses of carbon removal certificates and certified units, to prevent mitigation deterrence, greenwashing and the erosion of public trust, especially regarding compensation claims for fossil fuel emissions based on lower-durability removal certificates. The current proposal lacks guardrails as to which claims can be made based on the characteristics of generated certificates and the CDR methods used to generate them.
Communication on Sustainable Carbon Cycles by the European Commission announcing the development of the framework
Proposal for the certification framework adopted by the European Commission
First meeting of European Commission expert group on carbon removals
The AGRI Committee (committee for opinion) adopted its opinion on the file
ENVI Committee vote on the adoption of the ENVI report
General approach expected to be reached by Member States in the Council
Development of methodologies for certification of different carbon removal activities
Trilogues between EU institutions and provisional agreement expected
Expected entry into force of the CRCF
Commission report expected on the potential inclusion of carbon storage in products in scope of the LULUCF Regulation
Commission will have to assess the potential inclusion of carbon removals with permanent storage in the EU ETS
- Communication on Sustainable Carbon Cycles, European Commission
- Impact assessment accompanying the CRCF proposal, European Commission
- A Union certification framework for carbon removals, European Parliament briefing, 2023
- Carbon Gap White Paper: A Guide to Certifying Carbon Removal, 2022
- Carbon Gap reaction to the European Commission proposal on carbon removal certification, 2022
Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a Union certification framework for carbon removals
Key Institutional Stakeholders
European CommissionDG Climate Action (CLIMA), Unit CLIMA C.3: Low Carbon Solutions (III): Land economy and carbon removals
European ParliamentCommittee responsible: ENVI Rapporteur: Lídia Pereira (EPP, PT) Shadow rapporteur: Tiemo Wölken (S&D, DE) Shadow rapporteur: Emma Wiesner (Renew, SE) Shadow rapporteur: Ville Niinistö (Greens/EFA, FI) Shadow rapporteur: Anna Zalewska (ECR, PL) Shadow rapporteur: Mick Wallace (GUE/NGL, IE)
Council of the European UnionCouncil configuration: ENV
In a Nutshell
The Directive for the substantiation of explicit environmental claims (Green Claims Directive) is a legislative proposal that aims to address and reduce greenwashing in consumer-facing commercial practices. It establishes minimum requirements on the substantiation and communication of voluntary environmental claims and labels that are not otherwise banned under the Directive on Empowering Consumers.
To make green claims (including climate-related claims) about the environmental footprint of their products, services, and operations, companies will need to comprehensively demonstrate environmental impact and performance by submitting recognised scientific evidence and the latest technical knowledge. The Directive establishes specific requirements for distinguishing claims on environmental performance from common practice, legal obligations, and from other traders or products.
Environmental claims and labelling schemes will be verified by independent accredited bodies before being put on the market. Member states will nominate a competent national authority to supervise this process, monitor and verify the claims and substantiations on a regular basis. This monitoring will help the Commission to evaluate where more specific requirements are needed and to implement delegated acts accordingly.
Climate-related claims such as net zero or carbon neutrality claims based on offsetting or carbon removal fall under the remit of this Directive. To substantiate such claims companies must report offsetting and emissions data separately, specify whether offsetting relates to emissions reductions or carbon removals, and explain accurately the accounting methodology applied. Once approved and when communicating to consumers, climate-related claims must be accompanied by additional information detailing the extent of reliance on offsetting and whether it is based on emissions reductions or removals.
What's on the Horizon?
The Green Claims proposal by the European Commission will now enter ordinary legislative procedure with the goal of reaching a formal adoption by the European Parliament and the Council.
2023-2024: The European Parliament and the Council will develop their positions separately.
- The Council adopted its negotiating mandate regarding the Directive on Empowering Consumers for the Green Transition on 3 May. The mandate outlines the Council’s position on this Directive which would lay the foundation for the Green Claims Directive.
- The European Parliament on 11 May adopted its position which sets stricter conditions than the Commission proposal and adds a definition of carbon offsetting.
- Negotiations between the Parliament and member states to find a middle ground are expected to start shortly. Complementing the Directive on Empowering Consumers, the Green Claims Directive will provide further guidance on the conditions to make substantiated environmental claims.
2024: Following trilogues between EU institutions, the Directive is expected to pass into EU law.
The Green Claims Directive complements the Empowering Consumers Directive published by the European Commission on 30 March 2022 within the EU Together, they aim to improve the circularity of the EU’s economy and achieve climate neutrality. They respectively set requirements to substantiate environmental claims made to consumers and and other commercial practices.
Apart from the French ministerial decree n°2022-538, the Green Claims Directive is a first of its kind in the specificity with which it regulates environmental claims and addresses climate-neutrality claims. The French decree regulates advertising claims based on emission compensation projects. It has different requirements surrounding emissions reporting, compensation data, and net zero plans.
The Green Claims Directive proposal addresses the issue of greenwashing, increasingly prevalent in recent years. It seeks to standardise environmental claims and labels to improve transparency and credibility for consumers. The proposal aims to use delegated and implementing acts in the future to address substantiation methodologies for specific product groups and evolving commercial practices.
The preamble of the proposal states that climate-related claims are prone to being unclear and misleading, as they are often based on offsetting greenhouse gas (GHG) emissions through carbon credits of low environmental integrity and credibility, generated outside the company’s value chain and calculated based on methodologies that vary widely in transparency, accuracy, and consistency. Offsetting can also deter traders from reducing emissions in their own operations and value chains.
However, credible net zero claims have the potential to incentivise and drive the development of safe, just and sustainable carbon removals to transition towards real climate neutrality. Claims based on offsetting must be regulated through a robust and science-based system to prevent greenwashing.
Room for improvement
Unfortunately, the Green Claims Directive as it currently stands does not establish the necessary measures to do so:
- The Directive does not align with scientific consensus as it allows offsetting through emissions reductions and avoidance to substantiate carbon neutrality claims. The IPCC’s definition of net zero is clear: balancing emissions with physical removals. Accordingly, offsetting projects that avoid emissions, but do not physically remove and store carbon, must be barred from use in substantiating claims about net climate impacts.
- The proposal rightly requires companies to report GHG emissions separately from offsetting data, to disclose the share of their total emissions that are addressed through offsetting and whether these come from emission reductions or removals. This isn’t enough to monitor whether the claimed climate impacts are real There is a need for more extensive disclosure on the types of carbon credits companies are purchasing (avoidance, reduction, removals), which emissions they are claiming compensation for, and the methodologies used to ensure integrity and correct accounting.
- The proposal allows all types of offsetting without any clear criteria for which emissions they can compensate for, nor which climate claims they can substantiate. However, not all carbon storage is equal in terms of capacity, duration or reversal risk. This means that long-lived fossil fuel emissions otherwise impossible to abate can only be balanced by removals with high-durability storage in the geosphere where the carbon came from. Lower-durability removal and storage of carbon into the biosphere must be accelerated for its own sake, to halt and reverse the loss of ecosystems and natural carbon stocks but cannot be eligible to compensate for fossil fuel emissions. Failing to enshrine this non-fungibility principle in EU law would allow companies to continue offsetting their long-lived emissions through shorter-term carbon storage with higher risks of reversal.
- Although the Directive encourages companies to use offsetting only for residual emissions, it provides no robust definition for what constitutes these residual or ‘hard-to-abate’ emissions. Without a sector-specific and measurable definition, companies can weaken emission cutting efforts by manipulating the boundary between ‘emissions that must be reduced’ and ‘emissions that physical removals can offset’. The EU will need to establish a transparent process for classifying emissions as difficult-to-decarbonise.
- The proposal excludes from its scope environmental claims and labels substantiated by rules in the Carbon Removal Certification Framework (CRCF). However, the proposal for the CRCF has no rules for claim substantiation. Instead, the Green Claims Directive could establish guardrails for legitimate net zero claims, which could be substantiated through the purchase of high-quality carbon removal credits certified under the CRCF.
The EU Circular Economy Action Plan sets out the plan to support the EU’s transition to a circular economy, including by protecting consumers
Impact assessment and public consultation on substantiating green claims
European Parliament resolution ‘Towards a more sustainable single market for business and consumers’
European Commission proposal for a Directive on Empowering Consumers for the Green Transition
European Commission proposal for Green Claims Directive
European Parliament adopts its position on the Directive on Empowering Consumers for the Green Transition
Deadline to provide feedback to the Commission on the Green Claims legislative proposal
- The EU Circular Economy Action Plan, European Commission
- Annual ‘sweep’: Screening of websites for ‘greenwashing’, European Commission
- Impact Assessment Report on Empowering Consumers, European Commission
- Recommendation on the use of the Environmental Footprint method, European Commission
- Strengthening climate-related claims: Carbon Gap response to the Green Claims proposal
- Corporate Climate Responsibility Monitor 2022, NewClimate Institute and Carbon Market Watch
- Greenwashing Factsheet, BEUC
- Sustainable consumption briefing, EPRS
Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on substantiation and communication of explicit environmental claims (Green Claims Directive)